This page has been archived and commenting is disabled.
So, What Does This Obama Stuff Really Mean for the Big Banks? You Know, From a Fundamental Perspective
- Alt-A
- Asset-Backed Securities
- BAC
- Bank of America
- Bank of America
- Bear Market
- Bear Stearns
- China
- Citibank
- Fail
- fixed
- Goldman Sachs
- goldman sachs
- Investment Grade
- Lehman
- Lehman Brothers
- Mark To Market
- Monkey Business
- Morgan Stanley
- Prop Trading
- ratings
- Ratings Agencies
- Real estate
- Reality
- Reggie Middleton
- Stress Test
Well, it looks like Blankein, Dimon, et. al. really should have tried
harder to make that meeting with the President a couple of weeks ago.
It appeared as if he may have had something important to discuss. As my
readers and subscribers know, I have been very bearish on the big money
center banks since 2007, and quite profitably so. The last 3 quarters
saw a much larger trend reversal than I expected, that resulted in the
disgorgement of a decent amount of those profits - a disgorgement that I am still
beating myself up over. You see, as a fundamental investor, I don't do
well when reality diverges from the fundamentals for too long a period.
Luckily for me, fundamentals always return, and they usually return
with a vengeance. To keep things in perspective though, I am still up
on a cumulative basis many, many multiples
over the S&P (which is still negative, may I add) as well as your
average fund manager. Why? How was I able to do this? Well, its not
because I am supersmart, or well connected. It is because I keep things
in perspective. Those that look at the records that I publish say,
"Well he was down the last couple of quarters, so..." while
disregarding what happened the 8 or even 40 or so quarters before that.
Such a short term horizon will probably not be able to appreciate the
longer term perspective and foresight that enabled me to see this
entire malaise coming years ago and profit from it. No, I am not
perfect and I do mess up on occasion, but I also do pay attention to
the facts.
These facts pointed to a massive overvalutation in banks throughout the bulk of last year, again! I made it clear to my subscribers that the banks simply have too many
things going against them: political headwinds, nasty assets,
diminishing revenue drivers, over-indebted consumers, and a soft
economic cycle. I also warned explicitly that I didn't think Obama
would be nearly as lenient on the banks as Bush was. Well, the
headwinds are stiffening. On that note, let's take an empirical look at
just what this means in terms of valuation (note, I will following this
up with a full forensic re-valuation for all subscribers, incuding a
scenario analysis of varying extents of principal trading limits). Some
of these banks are I-N-S-A-N-E-L-Y overvalued
at these post bear market rally levels considering the aforementioned
headwinds. Methinks fundamental analysis will make a comeback in a big
way for 2010 as it meets the momentum and algo traders in a mutual BEAR
feast on the big investment banks cum hedge funds. I can't guarantee it
will happen, but the numbers dictate that it should. We shall see in
the upcoming quarters.
We have retrieved information about trading revenues for GS, MS, JPM
and BoFA. We have also retrieved some balance sheet data to reflect the
trend in investment holdings and the level of leverage, but I will
address that in a future post for the sake of expediency. While the
banks don't break out the P&L for principal trading, we can sort of
back into it. Remember, traders are fed bonuses off of net revenue, not
profit.
Goldman Sachs
Trading revenues accounted for more than 50% of the total revenues over
the last 8 quarters. The impact on earnings is magnified with the total
trading revenues amounting to more than 150% of the total pretax income
over the last 8 quarters except for the last quarter in which the
earnings were positively impacted by substantial decline in
compensation expense which was negative 519 million in 4Q09 against 5.4
billion in 3Q09. The negative compensation charge during the quarter
was owing to accounting adjustments
Principal investments which are purely GS
proprietary transactions contribution ranged within 5% to 15% of the
total revenues except in 4Q08 when the huge write downs in principal
investments offset the positive revenues from other sources. Revenues
from principal investments ranged within 15%-50% of the total pre-tax
income except in 4Q08.
Click to enlarge.
Note: In the GS income statement, revenues from trading and
principal investments is the GS total revenues from trading activities. This
revenue item comprises of two heads - trading and principal
investments.
Revenues from proprietary trading in FICC (Fixed income,
currency and commodity) and Equities is clubbed with the trading revenues
earned on the transactions done on behalf of clients and is reported under the
former head. In first nine months of 2009, nearly 41% of the trading revenues
came from interest rate related transactions and 37% came from equities.
|
GS trading revenues break up (in $ million) |
3Q09 |
% of total |
9M09 |
% of total |
|
Interest rates |
3,928 |
58.6% |
8,314 |
40.6% |
|
Credit |
2,022 |
30.2% |
4,358 |
21.3% |
|
Currencies |
(3,617) |
-54.0% |
(4,038) |
-19.7% |
|
Equities |
3,406 |
50.8% |
7,515 |
36.7% |
|
Commodities and other |
|
14.4% |
4,307 |
21.1% |
|
Total |
6,703 |
100.0% |
20,456 |
100.0 |
The latter head primarily represents net investment gains/
losses from certain corporate and real estate investments and investment in the
ordinary shares of Industrial and Commercial Bank of China Limited. Total
principal investments amounted to 20.7 billion which is just 6-7% of the total
investment portfolio of GS.
Thus, most of proprietary trading revenues is included the
former head . However, it difficult to differentiate between proprietary
trading and client related trading.
Revenues
from principal investments in case of GS and MS are not trading revenues but
are write-ups/downs on certain illiquid investments which are segregated as
principal investments. We have created various scenarios to demonstrate the impact of decline in trading
revenues on earnings.
More of Reggie on Goldman Sachs
 |
| Subscribe
|
Free research and opinion
- Reggie Middleton on Goldman Sachs' fourth quarter, 2008 results
- Goldman and Morgan losses in the news, about 11 months late
- Blog vs. Broker, whom do you trust!
- Monkey business on Goldman Superheroes
- Reggie Middleton asks, "Do you guys know who you're messin' with?"
- Reggie Middleton on Risk, Reward and Reputations on the Street: the Goldman Sachs Forensic Analysis
- Reggie Middleton on Goldman Sachs Q3 2008
§ As Reality hits, the Masters of the Universe are starting to look like regular bank employees
Reggie Middleton's Goldman Sach's Stress Test: Breaking Ranks with the Crowd Once Again!
Who is the Newest Riskiest Bank on the Street?
More Goldman Premium Stuff!
Goldman Sachs Report June 21, 2008 2008-10-20 16:48:01 361.18 Kb
Reggie Middleton on Goldman Sachs' fourth quarter, 2008 results
Goldman Sachs - Buffet's strategic investment and public offering 2008-09-26 02:29:15 895.36 Kb
GS ABS Inventory 2008-02-25 06:48:56 1.22 Mb
Goldman Sachs Valuation Model updated for PPIP - Retail 2009-04-04 19:50:51 388.04 Kb
· Morgan Stanley
Trading revenues contribution to total net revenues ranged with
15%-150% of the total revenues over the last 8 quarters except in 1Q09
when the trading revenues were more than offset by write-downs in
principal investments. The impact on earnings is magnified with the
total trading revenues amounting to more than 100% of the total pretax
income over the last 8 quarters except in 1Q09.
Principal investments contribution to total
revenues has been less than 5% of the total revenues over the last 8
quarters except in 4Q08 and 1Q09 during which huge write-downs were
recorded in the principal investments. Revenues from principal
investments ranged within 15%-25% of the total pre-tax income except in
1Q09.
On Morgan Stanley - The Riskiest Bank on the Street
The latest update for all subscribers: Morgan Stanley Forensic Outlook: Q1 2010 2010-01-05 04:20:36 504.53 Kb
Free Research: The Riskiest Bank on the Street
Doesn't Morgan Stanley Read My Blog?
Wall Street is Back to Paying Big Bonuses. Are You Sharing in this New Found Prosperity?
Historical Subscription Research
Morgan Stanley_final_040408 2008-08-30 06:37:54 1.38 Mb
MS Simulated Government Stress Test 2009-05-05 11:36:25 2.49 Mb
MS Stess Test Model Assumptions and Stress Test Valuation
Morgan Stanley ABS Inventory 2008-08-30 06:37:32 1.65 Mb
JP Morgan Chase
JPM’s trading revenues come primarily from principal transactions
(JPM’s proprietary revenues). Trading revenues contribution to total
net revenues ranged with 5%-15% of the total revenues over the last 8
quarters except in 4Q08. Total trading revenues ranged within 20%-100%
of the pretax income
except in 4Q08. As a commercial bank, JPM is doing horribly in terms of
earnigns due to credit losses. I actually see this getting worse in the
near future before it gets better (see the quarterly reviews and
forensic reports below), and as it gets better it will do so gradually.
Stripped of the risky, yet profitable prop trading, JPM will be looking
a lot more like Citibank than many pundits may think!
Click graph to enlarge
Cute graphic above, eh? There is plenty of this in the public preview.
When considering the staggering level of derivatives employed by JPM,
it is frightening to even consider the fact that the
quality of JPM's derivative exposure is even worse than Bear Stearns
and Lehman‘s derivative portfolio just prior to their fall.
Total net derivative exposure rated below BBB and below for JP Morgan
currently stands at 35.4% while the same stood at 17.0% for Bear
Stearns (February 2008) and 9.2% for Lehman (May 2008). We all know
what happened to Bear Stearns and Lehman Brothers, don't we??? I warned
all about Bear Stearns way before they collapsed (Is this the Breaking of the Bear?: On Sunday, 27 January 2008) and Lehman as well ("Is Lehman really a lemming in disguise?":
On February 20th, 2008) by taking a close,
unbiased look at their balance sheet. Both of these companies were
rated investment grade at the time, just like "you know who". Now, I
am not saying JPM is about to collapse, since it is one of the anointed
ones chosen by the government and guaranteed not to fail - unlike Bear
Stearns and Lehman Brothers, and it is (after all) investment grade
rated. Who would you put your faith in, the big ratings agencies or
your favorite blogger? Then again, if it acts like a duck, walks like a
duck, and quacks like a duck, is it a chicken??? I'll leave the rest up
for my readers to decide.
AnFree stuff: Independent Look into JP Morgan Plenty more of this in the public preview. When considering the staggering level of derivatives employed by JPM, it is frightening to even consider the fact that the quality of JPM's derivative exposur... Friday, 18 September 2009
The Real Stuff -
The JP Morgan Full Forensic Report is ready for download! Must Read: An Independent Look into JP Morgan. This contains the "public preview" document (JPM
Public Excerpt of Forensic Analysis Subscription 2009-09-18 00:56:22
488.64 Kb), which is fre...Thursday, 24 September 2009
A Fundamantal Investor's Peek into the Alt-A Market:
This is one of the reasons why JPM needs to be a hedge fund to make money. Other banks to look at with suspect portfolios:
JP Morgan Chase
(Free Preview) JPM Public Excerpt of Forensic Analysis Subscription 2009-09-22 14:33:53 1.51 Mb
JPM ... Thursday, 14 January 2010
This is one of the reasons why JPM needs to be a hedge fund to make money. Other banks to look at with suspect portfolios:
JP Morgan Chase
(Free Preview) JPM Public Excerpt of Forensic Analysis Subscription 2009-09-22 14:33:53 1.51 Mb
JPM ... Thursday, 14 January 2010
Quarterly Reviews:
- Reggie Middleton on JP Morgan's "Blowout" Q4-09 Results
- Reggie Middleton on JP Morgan's Q309 results
Blog Stuff:
Why Doesn't the Media Take a Truly Independent, Unbiased Look at the Big Banks in the US?
JPM
derivative and off balance sheet lending commitments and guarantees
exposure Warning!!! This is the type of investigative, unbiased and
independent analysis that you will never find in the main stream media or the sell side... Thursday, 03 September 2009
JPM
derivative and off balance sheet lending commitments and guarantees
exposure Warning!!! This is the type of investigative, unbiased and
independent analysis that you will never find in the main stream media or the sell side... Thursday, 03 September 2009
...and scroll down to the second half.
JP Morgan securitization activities and QSPE exposure
JPMorgan securitizes and sells a variety of loans, including residential mortgage, credit card, a...
JP Morgan securitization activities and QSPE exposure
JPMorgan securitizes and sells a variety of loans, including residential mortgage, credit card, a...
Tuesday, 13 October 2009
The Next Step in the Bank Implosion Cycle???
... Must Read: An Independent Look into JP Morgan. This contains the "public preview" document (JPM Public Excerpt of Forensic Analysis Subscription 2009-09-18 00:56:22 488.64 Kb), which is fre...
Tuesday, 27 October 2009
Bank of America (this may be a literal moniker sometime soon if the system relapses)
Trading revenues contribution to total net revenues ranged within
3%-25% of the total revenues over the last 8 quarters except in 4Q08.
Although the trading revenues contribution to the total revenues has
been declining over the last few quarters, the impact on earnings has
been magnified because of reduced earnings (owing to high provisions
for loan losses and reduced income from other sources). While the
trading revenues amounted to 20-30% of the pretax income in 1Q08 and
2Q08, it has amounted to more than 100% of the total pretax income over
the last 6 quarters.
If a Bubble Bubble Bursts Off Balance Sheet, Will Anyone Be There to Hear It?: Pt 3 - BAC (the bank
If the Bulge Bracket Sector starts to move down, "Look Out Below!"
I seem to have been one of the very few was bearish on Goldman and
Morgan Stanley in early 2008 (see links at the bottom of this post as
well as Get Your Federally Insured Hedge Fund Here, Twice the Price Sale Going on Now! and It appears as if the patina on Goldman's Stock is fading... and The Riskiest Bank on the Street).
As illustrated to subscribers in the Morgan Stanley Forensic Outlook: Q1 2010 2010-01-05 04:20:36 504.53 Kb,
the bulk of the valuation increase for the big investment banks stems
from the peer group bear rally premium of the last 9 months. If, or
more accurately, when that premium dissipates, the whole sector will
drop in fundamental value. I don't believe the banks are worth what
they are trading at now, but comps are comps. Let's take a look at the
comp trend.
As you can see, thanks to the bear market rally, the enire I bank peer
group has enjoyed a big bump in valuation - one that I believe will
prove to be transient, to say the least.
If I am right, then these I bank stocks will collapse for the value
drivers just aren't there to drive the valuation. Nearly all business
units are trending down save a bump or two, FICC and trading arbitrage
can't last forever (some analysts say the party is over already), and
eventually the credit losses and asset devaluations on the balance
sheet will come a knockin', despite the "get 4 quarters' worth of free
mark to market lies" from the powers that be. Residential real estate
is resuming its downtrend (see If Anybody Bothered to Take a Close Look at the Latest Housing Numbers...) as credit loses resume their uptrend (seeThe Truth! The Truth? Banker's Can't Handle the Truth!!! andResidential Lending Credit Losses Worsen as Unstainable Government Support Proves... Unsustainable).
- advertisements -
First and foremost we protect your rights. We represent you in either the Foreclosure defense, Loan Restructuring, Bankruptcy or Short Sale. We negotiate with your lender and attempt to get you into a mortgage payment you can comfortably afford without having to refinance. We represent you to make sure you’re getting the terms that meet your needs. http://www.u2can-consolidacionenmiami.com
Reggie, you seem to be on the same page as Martin Weiss' crew with regard to TBTF banks and their balance sheets. I can't recall which other person (Kudlow ?) it was who said at one time, nationalization of the banks was the best method for economic recovery / stability.
With the upcoming tax, limits om operations, increased FDIC fees, reduced profits from credit card operations, more write-offs on commercial real estate, and so forth, maybe "they" are leading the horses to water (i.e. central control).
IMHO, nationalizing the TBTF banks might be the tool by which the government sells more bonds, which could facilitate a rescue of many states. I am suggesting this could be done for political reasons (e.g. to regain popularity).
Reggie, you seem to be on the same page as Martin Weiss' crew with regard to TBTF banks and their balance sheets. I can't recall which other person (Kudlow ?) it was who said at one time, nationalization of the banks was the best method for economic recovery / stability.
With the upcoming tax, limits om operations, increased FDIC fees, reduced profits from credit card operations, more write-offs on commercial real estate, and so forth, maybe "they" are leading the horses to water (i.e. central control).
IMHO, nationalizing the TBTF banks might be the tool by which the government sells more bonds, which could facilitate a rescue of many states. I am suggesting this could be done for political reasons (e.g. to regain popularity).
Only so much can be stolen. It can only be stolen until it is ALL GONE. All gone!
A++ on the JPM derivatives graph!
Reggie
Have you done any research into the amount of govt contracts JPM has and what they cover? They are truly the anointed ones. They control many of the key payment systems for the federal govt .
This has been going on awhile. I think the drive to privatization that started in earnest at the start of the oughts gave JPM the catbirds seat on getting control of key segments of how the govt distributes funds and how it pays for goods and services. While the value of these contracts won't ring a big bell on earnings, it will ring a big bell when one refers to systemic risk.
55 Contracts in 2009 ( up to the third quarter) 771 Contracts since 2000. Nothing too trivial in the contracts. I found the -0- balance on contracts on some contracts a little intersting. I have no explanation other than it was assigned it has been going on and no has done a tally on it. It wasn't negotiated as a fixed price contract. That's an eye opener.
If they are sole source supplier for many of these services, there is only so far they can push them. Then they will hit a wall. That's when Nationalization will come back into the debate. If people realized how dependent the Govt was on this Bank and 5 more of the TBTFs that I did research on, I doubt Nationalization would have raised a big stink. Stop propping them up and then just take them over.
Keep the functions that are related to govt like food stamp distribution, purchasing etc and sell off the rest piecemeal. That might not be a bad way to de-leverage the country. Sell of the assets at 10% of Par to the 7900 banks that aren't in the circle with a small clause that ROI should not be more than 2x what they pay. That still cuts the Consumer leverage down by trillions. That's like a direct stimulus to the middle class without tax dollars.
I'm sure it will offend those who who stand strong for indentured servitude or they'll call it socialism/fascism/communism/someismhere.
I don't know of any small business who wouldn't do somersaults if they knew their customers had 60% more money to spend. Of course that would cause panic hiring and put a floor on housing prices as well as the stock market. It would push tax receipts straight up and the deficit straight down.
But why do it that way when the profitable way for politicians is to make it as complicated as possible. ?
good point dburn...i know that jpm has the food stamp accounts locked up and they must be making a small fortune on that one alone.
No I haven't. You can email me with the work you have done and I will look into it.
reggie at boombustblog dot com
Reggie...absolutely spot on.
The banks are insanely overvalued.
Fundamentals will rule the day.
fwiw, my number one insane bank at the moment is now STI. Insane does not even begin to describe the current pricing.
Well, if you really believe that STI puts are actually pretty cheap. I've been collecting OTM 2011 puts for pennies over the last few weeks. I have some STI forensic work, and it paid very handsomely in '08. If the price continues to elevate, I will revisit it in depth.
thanks reggie....maybe i'll raid my piggy bank and grab a few.
one other interesting note about STI and it concerns its chair/ceo (think his name is Wells). I've seen several comments of his and my read is that this guy is telling it like it is i.e. we are nowhere near out of the woods. Seems to me that this guy is being straight and certainly doesn't appear on the surface to be a pumper. I recall earlier this year at the big banking conference in your neighborhood he got a headline B'berg story and his comments were quite bearish. STI ran up that day and I remember laughing like hell.
If you own assets and can manipulate the market then the value of your firm is enahnced by the trading desk from the value it raises your assets. Think of how bad the results will be when you can't control the market and it drops when you're not short. The value of these firms is going to tank without the prop desk.
They will actually have to buy and hold a position like th reest of us and won't be able to ramp up the value of their assets
This could be construed as OT. However, since Reggie writes frequently regarding real estate, I will post here.
For those of you who also read Denninger, about a week or two ago, he posted an article commenting on anecdotes he had heard concerning second lien noteholders. The story was basically about not approving short sales unless they received some kind of comp off the books/under the table, even though in almost all cases their second lien is worthless. This activity is illegal but good luck proving it.
Well, a friend of mine in CA is in the process of a short sale. The realtor he is using also attempted to get him a modification and, when it failed, returned the deposit my friend had provided. Kudos to this realtor for returning the funds.
So, the realtor calls him yesterday and asks if my friend still has $4500 of the deposit. It seems the second lien holder has not approved the short-sale. To me the connection between the too is obvious, although it was never directly stated. My friend told him no.
Here's the bizarro-world part: the first noteholder is WFC (serviced by WAMU-->Chase) and the second noteholder is . . . WAMU-->Chase. Chase has acted as agent for WFC during the short sale process since it services the first note. So, we have at least one situation where the second lien holder is blocking the short sale AND just happens to be the same entity representing the first lien holder. To me, that is bizarre.
the 2nd lien/heloc matter is an enormous source of eventual losses for the banks. with fasb 157 as a masking agent, the banks will continue to kick this can down the road for years. at some point in time, the cash flow problem will show that the emperor has no clothers. the alternative is that the US gov't refinances every single residence in the usa at par to pay off the second liens. Minsky himself will resurrect at that moment.
if the principal reduction attempt comes back with a vengeance, or cramdown legislation, it's going to be a hell of a battle between the banks and the u.s. gov't.
And why should the second lien holder be compelled to do a short sale? If the second lien is worthless, why would they want to give up their lien position for nothing?? It is just an out-of-the-money option at this point - some day it might be worth something (understanding it might not).
Unclear why a second lien holder (regardless if it is related to the first lien holder) should abandon their interest for nothing. If the law says they can not be paid, that's fine. Stalemate. That's what happens with buyers and sellers a lot.
And if you feel the second lien holder has some duty to release because of government bailout or banker bonuses, etc, it does not seem approrpriate for any of the value from such release should accrue to the existing borrower or the potential buyer. All benefits should go back to the government (taxpayers) who funded those bailouts. Right?
Not to worry ... taxpayers will be ridden like jackasses to the rescue:
" ... Housing experts said the anticipated changes would probably cause mortgage companies to move more quickly to lower payments for borrowers, though perhaps at the cost of prolonging the foreclosure crisis. Requiring less documentation of borrowers’ incomes carries a risk of lending to people who simply cannot afford their homes, increasing the likelihood of subsequent delinquency.
“They are turning this from a legitimate program to try to save people who have the ability to hang on their homes into one that says, forget the willingness and ability to pay, let’s just postpone foreclosures,” said Edward Pinto, a mortgage industry consultant who served as chief credit officer at Fannie Mae in the late 1980s.
While declining to provide details, the Treasury confirmed its plans to alter the program at a meeting next week with mortgage companies — servicers, in industry parlance."
http://www.nytimes.com/2010/01/22/business/economy/22modify.html?ref=bus...
@202699,
If in a corporate liquidation where nothing is left after paying senior creditors, the junior creditors wanted to hold their worthless debt nobody would tell them they can't. However, the junior creditors would not be able to block the liquidation (unless Obama decreed it thus, for which there is precedent).
So, I guess I don't understand why the short-sale example I cited above should be any different. I believe the first lien holder in a short-sale even makes some "on the books" remuneration to the second lien holder. But the example that I cited and Denninger's examples are yet more examples of the wanting-something-for-nothing mentality that seems to afflict much of the US.
Anon...202699:
It may be partially the additional legal paper, perhaps missing records, the complication and the cost of getting every thing aligned in the real physical world. If there has been a bankruptcy with personnel turnover, things don't go smoothly. New people want to "go by the book" and don't know where things are or what the statutes really are.
Boeing Spaceliner797:
A stepdaughter is a states attourney in LA. Apparently quite a few situations there are, to use your gentle word, bizzare. It is expected to take several years to get the LA market straightened out.
Because I am a stockholder in BA, I am interested in more. Is there any scuttlebut about how the testing is going for the 787? The press releases on first flight were positive but seemed garded. I saw no real info on durability testing schedules or even expected sales deliveries.
Would you have any observations on the real world situation on timing to put it into the hands of customers?
TIA
Ty for the SoCal add hb.
I wish I had an answer for you on the 787 but, long story short, my handle on ZH has nothing to do with my profession. I am a former fin svcs professional. Now, if you wanted to know about BAC, I could tell you except for that pesky severance release agreement I signed.
pitchforks...
makes my blood boil.
'bizarre' is not the right word for this crap.
Politicking is all BS, please wake me when Dimon, Blankfein, BB, Paulson, Geithner, etc., etc. are being tried for TREASON, I don't see any reason they shouldn't be.
Can't believe that was all put togther in less than 24 hours.
Is there some kind of time warp on this blog?
Well, you see, thoughtful information and analysis would take more time.
RM is a massive self-promoter.
I love you too.
You seem scary Reggie. Lotta people trying break you down. Hope they xanadu you soon. Think it would be funny. Tell the bitch she sucks at faking and you deserve better.
http://cid-9f33f6e14912f497.skydrive.live.com/self.aspx/Illuminati%20NWO...
Reggie let me ask you a hypothetical.
Let's assume that we have a long bear market and clear pure equity revulsion on the part of small investors. Everybody loves bonds again, which historical patterns suggest is the norm anyway.
In this landscape, trading revenue--not just prop trading--is going to crater. Investment banks will need to survive by increasing asset management revenue.
Which inv banks have the highest asset management revenue as a % of total revenue?
I'm assuming that's a trick question of some sort. I know which I bank geared up to have the largest AUM revenue, after buying Citi's assets, but that probably wasn't under the assumption of a long term equity bear market, was it?
All of those brokers are only generating revenue if they are churning securities, and stocks and inhouse funds are the most profitable. If everyone turns to bonds and short duration fixed income, perhaps you should recommend Pimco start a banking arm... They are already doing credit rating for municipalities that they probably buy bonds from.
Not a trick question at all. Just wondering about your take on if trading churn dries up, who's going to get their skull crfushcked the least.
Appreciate your column.
Reggie, change Obama to Rahm in your title and you are accurate.
Yeah, it is. Too bad it's too late. Maybe if they hadn't already hocked the next three generations future it might actually be significant. But he did appoint those guys. It's not like he fell in with the wrong crowd by accident. They don't call him George W. Obama for nothing.
You ever have that feeling when you buy some expensive product only to find out that its a cheap POS? That's what GS is probably thinking about Geithner right now.
That cushy board position just got pulled from Geithner's golden parachute.
++ !
H&R Block is hiring seasonal preparers right now. Someone let Timmay know where to apply.
Thanks
You mean you don't think he's going to get hired by Intuit?
He lacks the minimum qualifications for a 30k/yr book keeper.
i wonder how many readers got the subtleties of your comment. nice.
:^)
The big banks downsize in a big way by default....
There is a lot of talk about how the Volcker Rule will never see the light of day....
It seems to me that these bank lobby types just do not get it....
Banks have their role....
And securties have their role....
If these two business crossover....it will destabilize the system....and as long as they are mingled...the system will never be stable....
I think the bank lobby people see it very very clearly. My paycheck is going to get a big bite out of it is what they see.
Do you think slime like that cares weather the economy crashes or not??????
This is the mentality that got us to where we are.